Group Now Tied to an Inquiry Figured in Bruno's Day at a Track

By SEWELL CHAN; Joe Drape and Margot Williams contributed reporting.

Published: December 29, 2006

It was the second day of the three-week racing season at Keeneland, a thoroughbred track and auction house on the western outskirts of Lexington, Ky., in the heart of bluegrass country. The weather was cloudy. Joseph L. Bruno, the majority leader of the New York State Senate, had traveled to join 20,200 people who paid $3 a head to watch the horses.

''He was very affable, very inquisitive,'' said George E. Nicholson, the president of Keeneland, recalling Mr. Bruno's visit on Oct. 8, 2005. ''I could tell he knew the right questions to ask. I could tell he was knowledgeable about racing.''

Later that day, over catered hors d'oeuvres in the library of the 1,000-acre estate, Mr. Bruno met donors at a reception that raised money for the State Senate's Republican majority, which the senator has led since 1994.

The trip, which included three aides to the senator and a veterinarian who has been close to Mr. Bruno for years, would become a catalyst for investigations into the business activities of Mr. Bruno, a thoroughbred enthusiast who has long raised horses on his farm in Brunswick, N.Y., northeast of Albany.

The trip to Kentucky was arranged by two officials at the Friends of New York Racing, a short-lived advocacy group formed by racing fans and executives intent on overhauling the Aqueduct, Belmont and Saratoga tracks, the centerpiece of an industry that generates $1.4 billion a year in economic activity in New York State.

After producing a 20-page report in December 2005, the group dissolved this year amid infighting, with many of its top directors and staff members joining a consortium that is now vying for the state's lucrative horseracing franchise.

In recent months, the advocacy group and one of its founding directors, Jared E. Abbruzzese, have emerged as central elements of separate investigations by the state lobbying commission and a federal grand jury.

The lobbying commission is examining whether Mr. Abbruzzese, a businessman and longtime friend of Senator Bruno's, violated state law by giving free or discounted flights to the senator.

Federal authorities are examining, among other things, whether substantial payments by Mr. Abbruzzese to Mr. Bruno's private consulting firm were part of an effort to influence the senator, who is likely to have a major say over who gets the racing franchise.

The authorities have also issued a subpoena to Wayne R. Barr Jr., a lawyer and business associate of Mr. Abbruzzese's, who helped arrange Mr. Bruno's trip to Kentucky.

The person behind the Friends of New York Racing was Timothy G. Smith, a former executive at the P.G.A. of America, the golf association, and at the National Thoroughbred Racing Association.

The new group was formed in late 2004 in response to the economic threat that video lottery terminals and casinos run by Indian tribes posed to the New York and national horse racing industries.

''In the current political climate, there is a real risk that the needs of the racing, breeding and pari-mutuel industries simply will be ignored in favor of other revenue-raising options,'' the group said in a mission statement on its Web site.

In a June deposition to the state lobbying commission, Mr. Smith said he was ''very alarmed'' when Gov. George E. Pataki raised the idea of expanding legalized gambling in a budget address in January 2005.

''I concluded that horse racing had made itself largely irrelevant to the state,'' Mr. Smith said, adding that racing needed to demonstrate that ''we're important, we have a lot of jobs, we're politically relevant.''

Mr. Smith, a lifelong Democrat, said he met Mr. Bruno in 1970 when they worked on the re-election campaign of Gov. Nelson A. Rockefeller, a Republican.

Mr. Smith enlisted 10 organizations -- a mixture of businesses and nonprofit groups -- to each contribute $100,000 to create the Friends of New York Racing. All 10 organizations worked in racing or gambling except one: Capital & Technology Advisors, a consulting firm founded by Mr. Abbruzzese, Mr. Bruno's longtime friend.

The Friends of New York Racing worked to curry favor with Mr. Bruno, playing host to a fund-raiser in Saratoga Springs, N.Y., on Aug. 12, 2005, and the Kentucky reception less than two months later.

Mr. Abbruzzese and Mr. Barr arranged Mr. Bruno's flight to Kentucky, according to the deposition and flight records.

Mr. Smith, who was on the Kentucky trip but did not travel with Mr. Bruno, did not respond to requests for comment. Lawyers for Mr. Abbruzzese and Mr. Barr declined to comment.

In its final report in December 2005, the Friends of New York Racing said that the industry was in financial jeopardy under the nonprofit New York Racing Association and that the state should ''permit any form of business or venture'' to compete for the franchise.

The report was the group's final public act. Within two months, its board voted to dissolve. Two consortiums of horse racing and gambling interests quickly formed, each competing to bid for the work.

The first consortium, Empire Racing Associates, included Mr. Abbruzzese and Mr. Smith, as well as Churchill Downs and the Magna Entertainment Corporation, which are leading owners of racetracks and founding members of the Friends of New York Racing. The former vice president of the Friends and two former members of its board of advisers are involved with Empire.

The second consortium, Excelsior Racing Associates, includes Steve Swindal, a managing general partner of the Yankees; Richard Fields, a casino developer; Tishman Speyer Properties, a developer; Bill Mulrow, a former candidate for state comptroller close to Governor-elect Eliot Spitzer; and Jerry Bilinski, the veterinarian who accompanied Mr. Bruno to Kentucky. R. Wayne Diesel, a former state budget director who was on the board of the Friends, is advising Excelsior.

Several of the founders of the Friends of New York Racing said they were startled by how quickly the group disbanded.

''When we entered into this arrangement, we assumed this body was going to be a completely neutral body to design the best method of making N.Y.R.A. effective,'' said Sherwood C. Chillingworth of the nonprofit Oak Tree Racing Association in Arcadia, Calif., which was one of the 10 groups that contributed $100,000 to the Friends of New York Racing.

''We're surprised to see so many people associated with that group spin off these into these competing organizations.''

In November, a state advisory committee recommended that the franchise be awarded to Excelsior, but the decision is really up to Mr. Spitzer, Mr. Bruno and the Assembly speaker, Sheldon Silver.

Records of Mr. Bruno's trip to Kentucky, among other flights, have been turned over to federal prosecutors, according to an official with knowledge of the investigation.

With so much scrutiny on Mr. Bruno, ties to the senator may be more of a liability than an asset. This week, Empire announced it was severing all ties with Mr. Abbruzzese and buying out his 6 percent share, citing the ''distraction'' created by the inquiries.

Photo: Joseph L. Bruno in 2000 with his horse Apache. ''I could tell he was knowledgeable about racing,'' the president of a Kentucky race track said. (Photo by David Jennings for The New York Times)(pg. B5)